World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

Wednesday, November 11, 2009

Good Morning, and Happy Veterans Day to all my fellow Vets who have served your country, thank you!

Equity futures went on to push to a new high overnight in both the DOW and the S&P. Amazing how major events like hurdling major resistance occur at night… simply amazing. Oh, and oh so not real. But it is what it is, and it’s exactly why I’m not gambling in the current market. Here’s a computer generated image of overnight computers generating the image for us:

I am seeing massive INSTABILITY in the markets. Bonds, in particular, are zooming upwards this morning (actual bond market is closed, but futures are trading). That is usually the direction bonds go when stocks are going down. BE CAREFUL, a major top is approaching in equities. The dollar did break to a new low beneath the 75 level. There is no more support for the dollar until the 71/72 area and below that there is NOTHING. A dollar collapse will NOT be good for equities. It will KILL the middle class, as in DEAD. And we don’t know how much more abuse the dollar can take before intervention comes into play – there is simply no guessing what the knuckheaded mental teenagers running our country will do next. At any rate, gold went on to make a new high at $1,118, and oil is back above $80 a barrel.

Here's an hourly chart of the dollar, the double red lines were the last area of support prior to the 71/72 level:

I hope everyone watches the movie “The Secret of Oz.” I am going to propose exactly how to cure these problems once and for all. The solution will not be found in either the gold standard nor debt based fiat. Bill Still’s saying, “It’s not what backs the money, it’s who controls the quantity,” is spot on (the money). Keep that in mind. I also want to highlight an area in which I’ve been mistaken, namely I have always sided more closely with the gold bugs when I used to say, “Every fiat money system in history has failed.” While that’s true, it ignores the fact that every gold backed currency in history has also failed! What’s the answer? I’m going to lay it all out there in the days ahead and my hope is that a political movement can rise up around it.

Meanwhile, big bank bonuses are up 40%! Does everyone see the flow of money here? The government bails out the banks with zero interest loans, oh and by exchanging their worthless debt instruments for cash, then the banks use that electronic money not to lend to you at a reasonable rate, no, they use it to back their HAL 9000’s who monkey and play with the markets running over resistance levels at night while you’re asleep. Of course the government doesn’t really have the money to give them in the first place and thus they print up more interest bearing credit dollars and buy up their own debts, thus circumventing the very way the system is supposed to work as they designed it! That process drives the dollar down in value, in essence a hidden TAX on the American public. In other words, you and your money is financing the games in the market and you are absolutely paying the record bonuses to the Bozo’s on Wall Street. And yet, the whole system is going to come down, the outcome of which will be a result of those involved. They are guilty, and history shows that much real pain can and will follow their highly immoral actions.

China claims to have created something like 16% growth in sales and production!!!

Production rose 16.1 percent from a year before, the most since March 2008, the statistics bureau said in Beijing today. Retail sales gained an annual 16.2 percent in October, it said. The trade surplus almost doubled from September, to $24 billion, as the slide in exports eased to the slowest pace this year.

Of course they directly injected something like a quarter trillion dollars and exports are still way down. Huge bubble, massive collapse, now another HUGE bubble! What a roller coaster ride! Anyone thinking this is TERRIFIC, it’s the future, is NUTS. It’s a recipe for disaster, it is the very definition of high risk. To those pumping overseas markets, I say GOOD LUCK, you will need it. There is not a REAL economy out there that I can see… the world is devolving due to the massive debts and derivatives, and interventions that now permeate the globe.

Tomorrow we finally will get a little economic data with the weekly jobless claims, the worthless MBA Purchase Applications, the petroleum report, and we’ll get to peak at the completely untrustworthy Treasury Budget report and Fed Balance Sheet.

We all better hope that the dollar does not degenerate into a free fall. In my opinion, that outcome is far, far worse to a country and its people than a deflationary depression. The dollar can be saved by pulling liquidity and by making moves to balance our budgets, but who believes that’s going to happen any time soon with the bonus boys fingers on the computers? At any rate, the technicals have so many divergences that their little computers are going catch fire sooner or later. We are actually doing the same exact thing that occurred at the ‘07 top where we broke beneath the rising wedges and then followed them up to new highs before rolling. Roll it will, it’s just a matter of time. By the way, the gaps left in the RUT and NDX are still there, they did not fill yesterday.